2017 (9) TMI 1955 - AT - Income Tax

Revenue's appeal on capital expenditure & Provident Fund additions dismissed for lack of evidence.

The appeal by the Revenue challenging the deletion of additions made on account of capital expenditure and delayed deposit in employees' Provident Fund ... Nature of expenditure - expenditure in relation to soil cultivation, planting and making sheds - capital or revenue expenditure - whether no expenditure was incurred in the extension/ expansion of plantation? - HELD THAT:- As that there was no expansion in the area of plantation therefore the principle laid down in the case of Tasah Tea Company Ltd. [2003 (2) TMI 42 - CALCUTTA HIGH COURT] is squarely applicable in this case wherein held that iis not an investment of fresh capital unless it is utilized for the purpose of expanding the plantation - Decided against revenue. Addition on account of delayed deposited in employees P.F account - CIT(A) submitted that employees’ contribution to PF account was deposited after the due date but before furnishing the income tax return as specified u/s. 139 - CIT-A allowed the claim - HELD THAT:- There is no distinction between employees' and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made towards employees' contribution to provident fund. Hence, we are inclined not to interfere in the order of ld. CIT-A. Hence the ground of appeal filed by the Revenue is dismissed. Issues:1. Deletion of addition made on account of capital expenditure.2. Deletion of addition made on account of delayed deposit in employees' P.F. account.Issue 1: Deletion of addition made on account of capital expenditure:The appeal by the Revenue challenged the deletion of the addition made by the Assessing Officer (AO) on account of capital expenditure for a specific amount. The AO observed that expenses claimed by the assessee, a limited company engaged in tea cultivation, were capital in nature. The AO sought clarification but received no details suggesting extension in planting, leading to disallowance of the expenses. The assessee contended that the expenses were related to soil cultivation, planting, and making sheds without any extension or expansion of plantation. The Commissioner of Income Tax (Appeals) (CIT(A)) deleted the addition, citing lack of evidence for expansion. The ITAT upheld the CIT(A)'s decision, emphasizing the absence of plantation expansion, in line with the jurisdictional High Court's ruling. The ITAT dismissed the Revenue's appeal, concluding no interference was warranted.Issue 2: Deletion of addition made on account of delayed deposit in employees' P.F. account:The Revenue contested the deletion of an addition for delayed deposit in employees' Provident Fund (P.F.) account. The AO noted the failure to deposit employee contributions within the due date, resulting in the addition to the total income. The CIT(A) deleted the addition after the assessee explained the delayed deposit before filing the income tax return. The ITAT analyzed the Provident Fund Act's provisions, emphasizing that contributions encompass both employees' and employer's shares. Section 43B of the Income Tax Act allows deductions for contributions paid before the due date of filing the return. Judicial precedents supported the inclusion of employees' contributions in the deduction. The ITAT held that no disallowance could be made if the total contribution was deposited before the return filing due date. Consequently, the ITAT dismissed the Revenue's appeal, aligning with legal interpretations and precedents.---